UK finance chiefs say these are the top risks to business

Getty Images/WPA PoolTop company bosses fear that policy shakeups following next month's election could put a fragile economic recovery at risk, according to a survey that found companies were already cutting back their spending plans.

With less than four weeks until polling day and tight opinion polls prompting warnings about risks to the pound, stocks and bonds from a hung parliament, a survey of chief financial officers found company bosses were worried the election risks upsetting the current "benign policy environment".

The study by accountants Deloitte revealed CFOs feared changes to fiscal, monetary and job market policies after the vote were likely to be harmful. The second biggest source of anxiety was the potential turmoil of a vote on Britain's membership of the EU, as promised by David Cameron.

Election and Brexit vote seen as top risks to business

Uncertainty over post-election policy change represents the greatest threat to UK business according to the Chief Financial Officers of the UK’s largest companies polled by consultants Deloitte. Deloitte

Uncertainty over post-election policy change represents the greatest threat to UK business according to the Chief Financial Officers of the UK's largest companies polled by consultants Deloitte. Photograph: Deloitte

Meanwhile the current situation in the eurozone was also seen to present more of a risk than when finance chiefs were polled six months ago, with deflation and the prospect of renewed crisis if Greece loses its battle to remain in the single currency.

Risk appetite falls

Deloitte found that 51% of CFOs say that now is a good time to take greater risk onto their balance sheets, down from a record high of 72% six months ago. Photograph: Deloitte

Only 51% of chief financial officers said that now was a good time to take more risk onto their balance sheet, down from a peak of 72% last autumn and the lowest reading in two years.

Ian Stewart, chief economist at Deloitte, said rising political uncertainty was coinciding with signs of growing defensiveness on the part of businesses.

"The UK economic outlook has improved since the start of the year but for CFOs this seems to have been offset by mounting political risk. Rising perceptions of uncertainty have dampened corporate risk appetite and fed through to a softening of investment intentions," said Stewart.

"Risk appetite appears to have decoupled from its usual drivers, the economic outlook and equity market performance. This provides an ominous reminder that the business recovery is not assured."

Uncertainty rises

Deloitte says 63% of CFOs now rate the level of uncertainty facing their businesses as above normal, high or very high - the highest reading in almost two years. Photograph: Deloitte

The survey of 108 CFOs of FTSE 350 and other large private UK companies found that almost two-thirds, or 63%, believe the level of uncertainty facing their business was above normal, high or very high - the highest reading in almost two years.

Company bosses appeared to be tightening the purse strings as they await the election outcome with expectations for capital expenditure dipping. A net 53% of CFOs say UK corporates will increase spending in the next 12 months, down from a high of 80% a year ago.

While they thought policy changes in many key areas in the next parliament would be negative for business, there was some optimism that reforms could be helpful in the areas of education and training and infrastructure policies.

Analysts are warning of turbulent times on financial markets as the outcome of the 7 May vote remains almost impossible to predict.

George Buckley, chief economist at Deutsche Bank in London commented:

"This is shaping up to be the most uncertain election in living memory, with even professional pollsters struggling to make sense of what political configuration may result in its aftermath. Whichever of the two main parties is the larger after this election, neither is expected to come close to a majority ... In short, if the polls stay where they are, it's easy to see why there may be no good market outcomes of this general election."

But Alastair Winter, chief economist at broker Daniel Stewart said that for now UK stock markets appeared relatively buoyant, keeping their focus on merger and acquisition activity and "signs of life in Europe".

While there is plenty of scope for wheeling and dealing it is likely that the government that emerges will not be able to pursue a referendum on Brexit or abandon major reductions in the annual public deficit," he said.

"Voters, business and markets all seem uncertain what to be uncertain about."